Trump’s anti-Canadian antics are good news for Alberta pipeline advocates – whether or not that was the plan

U.S. President Donald Trump may not actually have intended to deliver a blow to West Coast environmentalists opposed to the completion of the Trans Mountain Pipeline Expansion Project, but he has done so with his recent dubious allegations about Canada’s trading practices.

Building a pipeline capable of carrying diluted bitumen from Alberta to Vancouver Harbour, where it is claimed it will fetch a better price from Asian buyers than American ones on the Gulf Coast, may not make much difference for the national economy in the event the Trump Administration places huge tariffs on Canadian-built automobiles, for example.

Donald J. Trump, president of the United States (Photo: Michael Vadon, Creative Commons).

But it certainly strengthens the argument in the minds of many members of the public that Canada must complete the now federalized Trans Mountain project and perhaps build more new pipelines – whether coastal British Columbians like it or not – to diversify its economy.

Alberta New Democratic Party Premier Rachel Notley was certainly not shy about making that point, telling visitors to a Calgary petroleum trade show this week that President Trump’s “reckless attacks on our steel and aluminum industries and … the hard-working people that those industries employ” shows the need for the pipeline.

“I have a message to send to folks beyond this room, to British Columbia and to all Canadians,” she told the conference goers. “If the last days and weeks tell us anything, it’s that we, as Canadians, need to take control of our economic destiny.”

She made the same points again last night to a gathering of the party faithful in Edmonton – using President Trump as her straight man to sell her pipeline vision.

A group of visiting American eagles trying to pass themselves off as Canadians (Photo: Ken Billington, Creative Commons).

“Just so we’re all up to date where things stand in the world, Canada is a very hostile country” (pause for laughs) “and the North Korean regime is very loving. Canada is very greedy, duplicitous, backstabbing; while Russia should be welcomed with open arms to the G7 table. And our dairy farmers? They’re a major, major threat to U.S. security!”

Remember how Americans abroad used to stitch Canadian flags on their knapsacks, she asked. “Just recently we’re hearing stories of bald eagles” (beat, beat) “dressing up like Canadian geese. Yeah, that happened!”

All joking aside, Ms. Notley made her point to the friendlies in the same language as she made it to the oil industry: “As Canadians we need to take control of our economic destiny. We simply cannot put all our eggs in one basket. We must diversify our markets” – and that means, she asserted, building that pipeline.

Count on it, you’re going to be hearing these lines a lot in the weeks ahead.

Meanwhile, for those who support the time-tested, traditional methods of managing Alberta’s economy and keeping its budgets in balance, it’s starting to look as if the power of prayer may be coming through for Alberta one more time.

The traditional economic policy of Alberta governments back to Social Credit, of course, has been to keep taxes too low to pay for what we have to do, keep services relatively high to please voters, and pray for an increase in royalty revenue.

Now there are indications God may have answered Albertans’ prayers for another oil boom, with or without a bumper-sticker promise that this time we don’t hose it all away again, or words to that effect.

It must make the blood of Jason Kenney’s strategic brain trust over at United Conservative Party HQ run cold to see world oil prices creeping back up to a point where commentators can blithely speculate they could soon push Alberta’s account books back into the black, maybe even in time for the next provincial election, expected in 2019.

West Texas Intermediate, the North American benchmark price, has eased back upward to $65 US per barrel, almost 50 per cent higher than it was at this time last year.

Count on it, if this keeps up, there is bound to be a disconcerting pivot in the UCP’s propaganda coming soon. To wit: That while the worldwide drop in the price of oil that impacted Alberta’s budget was entirely the fault of the NDP and its policies, any positive effect from the worldwide increase in prices we are seeing now could have nothing whatsoever to do with local management of the economy.

5 Comments to: Trump’s anti-Canadian antics are good news for Alberta pipeline advocates – whether or not that was the plan

Thank you again, David, and I must say : poor Rachel! A little while ago it was those reprobates in BC that posed an existential threat to Canada, their mad premier playing politics with our pipeline just to appease his constituents. Now we Canucks must all stick together against an alliance of Americans and Russians and North Koreans. Seems birds of a feather do flock together…
DB

Geoffrey Pounder

June 15th, 2018

“Now there are indications God may have answered Albertans’ prayers for another oil boom…”

Unfortunately for Premier Notley, tensions with the U.S. will not make customers (willing to pay more) for AB’s sour heavy crude magically appear in Asia.
Unfortunately for PM Trudeau, conflict with Trump does not make AB dilbit globally competitive.
Worse, Notley’s own budget documents acknowledge that the demand for AB’s sour heavy crude is about to take a big hit:

Even if new pipelines are built (including Keystone XL and Enbridge Line 3 replacement), “the light‑heavy differential is forecast to remain wide as new rules on the sulphur content of marine fuels from the International Maritime Organization go into effect. This is expected to reduce demand for bunker fuel, which mainly comes from heavy oil, and reduce heavy oil prices.”
• open.alberta.ca/dataset/8beb5614-43ff-4c01-8d3b-f1057c24c50b/resource/68283b86-c086-4b36-a159-600bcac3bc57/download/2018-21-Fiscal-Plan.pdf#economic

The oilsands industry identifies the U.S. West Coast as Trans Mtn’s target market:
“California, not Asia, will be the most attractive market for Albertan heavy crude following KM’s Trans Mountain Pipeline expansion (TMX) from 300,000 b/d to 890,000 b/d. Lacking a deep water port, TMX’s Burnaby terminal on the British Columbian coast cannot handle carriers larger than an Afromax, making shipping costs less competitive than those of Middle Eastern sellers.”
• http://www.albertaoilmagazine.com/2017/03/california-better-market-trans-mountain-transported-crude-asia/

Qs for Notley and her acolytes:
1) What evidence do you have that overseas markets for AB sour heavy crude exist?
2) Who are these Asian buyers? Names and addresses.
3) Will they pay more than U.S. refineries do?

Kinder Morgan’s reports to the NEB did not identify an Asian premium.
Only 15 oil tankers loaded in Vancouver in all of 2016. Zero barrels to China. In 2016, 99% of Canada’s oil exports went to the U.S.
“In 2017, the Port of Vancouver only shipped 600 barrels of oil to China. That’s (much) less than a tanker load. That same year, the port shipped almost 13 million barrels of oil, or about 24 Aframax tanker loads, to the U.S.”

Economist Robyn Allan: “Market access to the south at better prices is why tidewater access on Trans Mountain’s system is barely used… If offshore markets promise higher prices, any reasonable businessperson would expect AB’s producers would have used it. They didn’t.

“Mexican Maya crude — a product as junky as heavy bitumen — sold at a $6.15 discount to customers on the U.S. Gulf Coast, and a $9.40 discount to customers in Asia.” (2017)
• thetyee [dot] ca/Opinion/2018/04/16/Canada-Petro-Politics/

Sassy

June 16th, 2018

Thanks for gathering all this information into one place. With these facts available for some time now, the politicians (provincial and federal) have to know any bitumen in the expanded pipeline will be heading to the U.S., so no gain for us, the owners. This is more scary when you think of all the foreign operators in the tarsands who recently sold their assets to Canadian companies (backed by Canadian banks). What happens when this falls apart because the west coast U.S. refineries give us next to nothing or don’t even want the dilbit because they have easier-to-refine shale oil and/or no buyers for the resulting high-sulfur oil? The multinationals profited hugely from our resource and are leaving us with stranded assets and dangerous tar ponds. I get the feeling we’ve been conned and our leaders know it but are not protecting Canadians. Why? I’m an NDP supporter so I’m having a difficult time wrapping my head around this issue. For a start, the party needs to tell the truth.

Scotty on Denman

June 15th, 2018

One wonders if Trumps tariff tantrum is really as much a losing proposition as everybody claims then is not global recession on the horizon? What does that do to the price of oil when less of it is being consumed as a result?

David

June 15th, 2018

There are times in the past Canada made an effort to reduce its reliance on the US market, I think of the 1970’s when that was an issue of some public debate. Perhaps that was the last time there was significant stress or tension in Canada/US trade relations, in part due to differing views on the Vietnam war and big personality differences between Nixon and Trudeau. Of course, the problem was sort of resolved (or at least the tensions reduced) with the departure of the impeachable Nixon. Will history repeat itself? Could we be so lucky?

However, it would probably be wise not to rely only on luck, as Trump seems to be perhaps more determined to damage trade than Nixon was. Trump may be able to do a great deal more damage before the US somehow manages to rid itself of him as President, or Congress figures out a way to rein him in. I suspect anyone exporting anything to the US is a bit nervous right now and is thinking about diversifying markets. Given that oil is a big export for Canada and it goes mostly to the US, that feeling likely applies to the Canadian nergy sector too. Traditionally, the US has given some preference to Canadian oil over other counties as it is closer and a more secure supplier. However, with the recent upside down world view of Trump where North Korea is suddenly great and Canada is terrible, perhaps we can not make the security argument, at least not to Trump.

I suppose relying too much on one export market is never good – we have all heard the old saying about not putting your eggs all in one basket. Until recently we looked at the US as a fairly benign trading partner, so we didn’t think or worry about that too much, but now we are wondering if that country (or at least some of its top leadership) has totally lost it. Perhaps one of the few good outcomes of Trumps recent tantrums is that we will think more seriously about how to diversify our trade and the risks being overly reliant on one foreign market can pose.